PHILLIMON MHLANGA
Zimbabwe’s insurance companies are likely to lose significant business to foreign insurers, who have a rich bundle of technologies at their disposal, to penetrate the local insurance market.
Global insurance peers have migrated from legacy systems to new technologies such as block chain, bitcoin, advanced analytics, telematics, the global positioning systems, drones, mobile, the internet of thing, and cloud solutions, smart contracts, and artificial intelligence among others and are leveraging on that to penetrate foreign markets including Zimbabwe.
These technologies are providing new ways to measure, control and price risk, engage with customers, reduce costs, improve efficiency and expand insurability.
While global insurance players have invested in largely block chain technologies, a move that has enabled them to trade in foreign insurance markets, most insurers in Zimbabwe have remained some of the largest users of traditional insurance systems. This means Zimbabwean insurance companies’ dominance in the local sector is likely to slip if they fail to migrate to emerging technologies in the near future.
The new wave of technology is bringing value because the insight or interactions is bringing foreign insurers and their personal and commercial customers closer through technology. Given the new technologies, which have overtaken traditional insurance penetration in many African countries, it is likely to redefine the traditional ways of insurance business the world over. Using these, insurers can reduce the uncertainty of their risk pool system. Insurance and pension Commission (IPEC) board chairperson, Lynn Mukonoweshuro, admitted that the local insurance industry was not yet ready to rumble.
She, however, warned local insurers to quickly become more nimble and face sweeping changes driven by a convergence of business and technology forces fueled by innovation. She said it was increasingly becoming difficult to separate insurance business strategies from technology.
The future, Mukonoweshuro, added is inextricably linked to harnessing emerging technologies such as block chain and disrupting portions of their existing business and operating models. This would help local insurance industry players make better decisions and reflect risk accurately while simultaneously driving costs down.Failure to harness emerging disruptive technolo gies will result in foreign insurers penetrating the Zimbabwean market, a situation which is likely to drive local players out of business.
“The emergence of “robo advice” that is automated finance advice, with limited human intervention, will also impact on the traditional role of underwriters and financial advisors,” Mukonoweshuro said.
“The potential disruption can only be ignored at own peril. With regards to insurance markets, new technology developments have created a global digital platform, which enable users to access and share
goods and services in what is now regarded as a “sharing economy” trans boundary global market.
“Therefore I challenge the industry to be wary of potential competition from foreign insurers, who may leverage technology to reach out to our market.
” She said technology adoption has redefined traditional ways of insurance claims handling. For instance, she said, machine learning based systems can calculate detriment using satellite images or drones.
“It will significantly reduce the need for human capital and cut time and cost,” Mukonoweshuro said.
“Historically, the insurance sector has been dominated by intermediaries who have played the role of understanding consumer and business needs and then matching and tailoring insurance products and solutions to their needs.
She said with the emergency of “cognitive” agents, insurers are now able to collect enormous amounts of real-time data through softwareclient interaction, which will allow them to gain deep insights into each of their clients’ unique needs and provide customised products and services accordingly.
The traditional role of agents and brokers, Mukonoweshuro said, may have to be re-defined adding that aggregators’ emerging role should not be ignored.She however, indicated that insurance and pension regulator was ready to support digital transformation of the sector.
“Personally, I have a passion for block chain given its capacity and potential to transform the financial sector, our financial lives and more importantly the insurance and pension industry in a similar way the advent of internet did to the business world,” Mukonoweshuro said.
“From the IPEC perspective, embracing technology is not an option given government’s commitment to technological advancements evidenced by the adoption of e-government in facilitating ease of doing business and streamlining business processes.
Recently, IPEC commissioned an information communication technology system to facilitate electronic -filing of quarterly and annual returns. Mukonoweshuro urged the industry to support the optimal utilisation of the system by filing returns on the system.
“I wish to challenge the market to pioneer in adopting block chain technology to attain universal access to insurance and pensions through harnessing the power of technology. “The commission stands ready to receive innovative ideas that will facilitate transformation of the insurance industry through technology adoption.
“By obtaining valuable real-time and personalised customer data through internet of things devices such as biometric wearable, cars and homes with embedded sensors, insurers can measure risk more accurately. To this end, risk assessment and risk pricing is now easy and precise courtesy of technology. Let us leverage technology in this regard.
”Kampala based Clic World Global founder and chief executive officer, Andre van Zyl, who was in Zimbabwe last week said: “In Uganda, this (block chain) has enabled growth in the insurance industry. I encourage the Zimbabwe insurance sector to embrace block chain technology. It has done wonders in Uganda,” he added
